Correlation Between CarMax and Uniper SE

Can any of the company-specific risk be diversified away by investing in both CarMax and Uniper SE at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining CarMax and Uniper SE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CarMax Inc and Uniper SE, you can compare the effects of market volatilities on CarMax and Uniper SE and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in CarMax with a short position of Uniper SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of CarMax and Uniper SE.

Diversification Opportunities for CarMax and Uniper SE

-0.6

Correlation Coefficient

CarMax  Uniper SE

Excellent diversification

The 3 months correlation between CarMax and Uniper is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding CarMax Inc and Uniper SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uniper SE and CarMax is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on CarMax Inc are associated (or correlated) with Uniper SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uniper SE has no effect on the direction of CarMax i.e., CarMax and Uniper SE go up and down completely randomly.

Pair Corralation between CarMax and Uniper SE

Assuming the 90 days trading horizon CarMax Inc is expected to generate 0.48 times more return on investment than Uniper SE. However, CarMax Inc is 2.1 times less risky than Uniper SE. It trades about -0.14 of its potential returns per unit of risk. Uniper SE is currently generating about -0.09 per unit of risk. If you would invest  8,569  in CarMax Inc on September 24, 2024 and sell it today you would lose (241.00) from holding CarMax Inc or give up 2.81% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

CarMax Inc  vs.  Uniper SE

CarMax Inc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CarMax Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, CarMax may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Uniper SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Uniper SE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with CarMax and Uniper SE

The main advantage of trading using opposite CarMax and Uniper SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CarMax position performs unexpectedly, Uniper SE can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Uniper SE will offset losses from the drop in Uniper SE's long position.

The idea behind CarMax Inc and Uniper SE pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.